Dollar Steady Ahead of Jackson Hole Speech as Inflation Worries Persist
The US dollar held steady on Thursday as markets digested mixed inflation readings and prepared for a speech by Federal Reserve Chair Kevin Warsh at the annual Jackson Hole conference.
The Fed's preferred inflation measure, the core personal consumption expenditures (PCE) price index, rose 0.2% month-over-month in July, matching expectations. The year-over-year reading remained unchanged at 3.3%, significantly above the Fed's long-term target of 2%. The data reinforced a resilient economy and sticky inflation, increasing the likelihood that the Fed will hold interest rates steady in September.
Currency market participants are closely watching Warsh's speech for any indication of the Fed's next move on interest rates. With volatility in the bond market already high due to concerns over inflation and rising debt levels, a dovish speech from Warsh could lead to further dollar weakness. On the other hand, a structurally hawkish speech would likely strengthen the dollar.
The South Korean won rose 0.3% against the US dollar after the Bank of Korea (BoK) delivered a second consecutive quarter-point rate hike, raising its benchmark rate to 3.00%. The BoK also raised its 2026 economic growth forecast to 3.3% from 2.6%, providing explicit yield support for the won.